Investor Update - d17avvkqn7yvpt.cloudfront.net · Statements in this presentation that are not historical facts are hereby identified as “forward-looking statements,” including

Investor Update Thunderbolt II and Beyond

September 2018

Forward Looking Statements & Non-GAAP Measures

Statements in this presentation that are not historical facts are hereby identified as “forward-looking statements,” including any statements about our expectations, beliefs, plans,predictions, forecasts, objectives, assumptions or future events or performance. These statements are often, but not always, made through the use of words or phrases such as“anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words orphrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differmaterially from those expressed in them. We wish to caution you that our actual results could differ materially from those anticipated in such forward-looking statements as a result ofseveral factors, including the following:

• our inability to make acquisitions of, or lease, aircraft on favorable terms;• our inability to sell aircraft on favorable terms or predict the timing of such sales;• our inability to obtain additional financing on favorable terms, if required, to complete the acquisition of sufficient aircraft as currently contemplated or to fund the

operations and growth of our business;

• our inability to effectively oversee our managed fleet;• our inability to obtain refinancing prior to the time our debt matures;• impaired financial condition and liquidity of our lessees;• deterioration of economic conditions in the commercial aviation industry generally;• increased maintenance, operating or other expenses or changes in the timing thereof;• changes in the regulatory environment including tariffs and other restrictions on trade;• unanticipated impacts of the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), including as a result of changes in assumptions we make in our interpretation of the

Tax Reform Act, guidance related to application of the Tax Reform Act that may be issued in the future, and actions that we may take as a result of our expected impactof the Tax Reform Act;

• potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto.We also refer you to the documents the Company files from time to time with the Securities and Exchange Commission (“SEC”), specifically the Company’s Annual Report on

Form 10-K for the year ended December 31, 2017, which contains and identifies important factors that could cause the actual results for the Company on a consolidated basis to differmaterially from expectations and any subsequent documents the Company files with the SEC. All forward-looking statements are necessarily only estimates of future results, and therecan be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Further, anyforward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstancesafter the date on which the statement is made or to reflect the occurrence of unanticipated events. If any such risks or uncertainties develop, our business, results of operation andfinancial condition could be adversely affected.

The Company has an effective registration statement (including a prospectus) on file with the SEC. Before you invest in any offering of the Company’s securities, you should readthe prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and any such offering. Youmay obtain copies of the Company’s most recent Annual Report on Form 10-K and the other documents it files with the SEC for free by visiting EDGAR on the SEC website atwww.sec.gov. Alternatively, the Company will arrange to send such information if you request it by contacting Air Lease Corporation, General Counsel and Secretary, 2000 Avenue ofthe Stars, Suite 1000N, Los Angeles, California 90067, (310) 553-0555.

In addition to financial results prepared in accordance with U.S. generally accepted accounting principles, or GAAP, this presentation contains certain non-GAAP financialmeasures. Management believes that in addition to using GAAP results in evaluating our business, it can also be useful to measure results using certain non-GAAP financial measures.Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with their most direct comparable GAAP financial results set forth in theAppendix section.

Agenda

3

Welcome

ALC Overview

Thunderbolt Platform

ALC Valuation Implications

ALC Overview

$17.3 billion Total Assets

Data as of June 30, 2018 unless otherwise noted; 711 aircraft owned, managed and on order includes 30 737-8 MAX aircraft and three 787-9 aircraft pursuant to an Agreement entered into in August 2018; $25 billion total committed future rentals includes $11.3 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.7 billion in minimum future rental payments related to aircraft which will deliver between 2018 and 2022; (1) Based on projected fleet net book value; (2) TTM as of June 30, 2018. Adjusted Pre-Tax ROE is a non-GAAP financial measure. See appendix for reconciliation to most directly comparable GAAP measure.

Air Lease Snapshot

711Aircraft owned, managed & on order

87%Orderbook placed through 2020

$25 billionTotal committed future rentals

16.7%Adjusted pre-tax return on equity2

Fleet size expected to double in five years1

Scale

Visibility

Growth

Returns

5

Track Record of Strong Growth & Profitability

61CAGR is the compounded annual growth rate calculated for the twelve month periods from December 31, 2012 to December 31, 2017.2TTM as of June 30, 2018. Adjusted Pre-Tax ROE is a non-GAAP financial measure. See appendix for reconciliation to most directly comparable GAAP measure.

Revenue ($mm) Shareholders’ Equity ($mm)

16.7% Adjusted Pre-

Tax ROE2

18.3% 5-year CAGR1

ALC has been consistently delivering strong results to its shareholders

Assets ($bn)

16.5%5-year CAGR1

$7.3

$9.2

$10.7

$12.4

$14.0

$15.6

2012 2013 2014 2015 2016 2017

$656

$859

$1,050

$1,223

$1,419$1,516

2012 2013 2014 2015 2016 2017

$2,333$2,523

$2,772$3,020

$3,382

$4,127

2012 2013 2014 2015 2016 2017

ALC Aircraft LeasingPeers

S&P 500

18.3%

13.5%

5.8%


S&P 500

5.8%

8.2%

15.6%


S&P 500

39.2%

22.1%

15.7%

Superior Performance to Peers and the S&P 500

Source: Bloomberg & public filings. Aircraft leasing peers calculated as the average of AYR, AER & FLY.1Pre-tax margin is calculated as pre-tax income divided by revenue for the twelve months ended June 30, 2018.2For the twelve months ended June 30, 2018.3CAGR is compounded annual growth rate calculated for the twelve month periods from December 31, 2012 to December 31, 2017.

Pre-Tax Margin1 SG&A / Revenue2

Profitability Efficiency Growth

ALC has generated results in excess of peers as well as the S&P 500

5-Year Revenue CAGR3

Aircraft Leasing Peers



7

Management Business Expands Investable Universe

Aircraft Age

Years 0 - 8 Years 8 - 20 Years 20+

Ownership

“Young Aircraft, Long Leases, Low Leverage”

$25 Billion Committed Rentals1

Management

“Customer Retention; Maintain Risk Profile”

Platform Extension and Management Fees

8

Ownership remains focused on young aircraft with an asset-light strategy in the mid-life space1Committed rentals as of June 30, 2018. Includes $11.3 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.7 billion in minimum future rental payments related to aircraft which will deliver between 2018 and 2022.

9

What Does TBOLT II Mean for ALC?

• We have made enhancements to the TBOLT platform, specifically designed to broaden the investor base for mid-life aircraft

• We believe we have created a replicable structure that allows for sustainable demand from investors

Increased Liquidity

• Absent other circumstances, ALC anticipates selling the majority of its aircraft as they age under sequential offerings through the TBOLT platform

• This allows us to retain valuable customer relationships

Optimizing Sales

• By unlocking the value of the cash-flows associated with our profitable leases, we believe this will lead to better returns for our shareholders

• Additionally, through the management of aircraft in the TBOLT platform, our goal is to create enhanced economics through increased management fees

Return Benefits

• The TBOLT platform is another tool that ALC has at its discretion to help manage residual value risk, to maintain ALC’s young fleet age, and its conservative balance sheet

Risk Management

Tool

• We believe based on the above factors, ALC should warrant a higher valuation and further differentiate us from our peers

Valuation Implications

Thunderbolt II Strategy

Top 5 aircraft lessor by owned and managed fleet (by number of aircraft) – $14.9 bn owned fleet of 271 aircraft, with 391 aircraft on

order1

Strong balance sheet, investment grade rated, and a young, largely unencumbered fleet

Corporate rating of BBB/BBB/A- (S&P/Fitch/Kroll)

Attractive order book benefitting from bulk pricing

Strong relationships across airline industry

Significant experience managing mid-life aircraft, which are critical for global airline operations

11

Overview of ALC’s Management Platform

Joint venture with Napier Park; Blackbird Capital I launched in November 2014 and Blackbird Capital II launched in August 2017

Accommodates incremental airline demand yet manages capacity constraints

Credit-positive tool to manage leverage, concentrations, and portfolio age and an incremental funding source for ALC through stable long-term partners (blue chip insurance companies and pension funds)

12-year term of certain Blackbird notes allows for long dated management of aircraft assets and earnings power

ALC’s mid-life strategy

Organizational initiative by ALC to partner with 3rd party capital providers and grow the management business while enhancing investment grade metrics

Allows ALC to maintain airline relationships and continue to act as servicer

Programmatic issuance expected as aircraft age naturally in ALC’s owned fleet

Managed vehicles are a strategic priority for ALC to help realize further shareholder value

1 As of June 30, 2018. Includes firm commitments to purchase 33 aircraft from Boeing pursuant to an Agreement entered into in August 2018.

12

Strategic Fit of the Thunderbolt Program

ALC Core Customers Use Young Mid-Life Aircraft

ALC’s core lessee base relies on mid-life aircraft to support operations

Aircraft between 8 and 20 years represent 30%1,2 of the in service fleets of the TBOLT II lessees below

The TBOLT program is an initiative to help ALC provide further aircraft alternatives to its client base while maintaining its investment grade balance sheet metrics (aircraft age, leverage)

TBOLT II Lessees Exemplify The Strategic Importance of the TBOLT Platform2

TBOLT helps ALC to expand its offerings to core fleet customers to the mid-life segment

ALC Managed Fleet Airlines’ Overall Fleets

Lessee Mid-Life # Mid-Life %Young-Life and

End of Life Aircraft

Young-Life and End of Life Aircraft

%Total Mid-Life # Mid-Life %



%Total

Air China 0 0% 13 100% 13 123 30% 289 70% 412China Eastern 0 0% 12 100% 12 91 18% 401 82% 492

Ethiopian 0 0% 2 100% 2 10 11% 78 89% 88

Interjet 2 100% 0 0% 2 26 33% 54 68% 80

S7 0 0% 5 100% 5 46 71% 19 29% 65

SpiceJet 3 60% 2 40% 5 23 39% 36 61% 59

Thomas Cook 0 0% 8 100% 8 35 58% 18 42% 53

Tiger Airways 0 0% 5 100% 5 12 18% 14 82% 26

Vueling 1 14% 6 86% 7 44 40% 65 60% 109

Total 6 10% 53 90% 59 410 30% 974 70% 1384

TBOLT II allows ALC to retain its customers and longstanding relationships

1 Source: Obtained from Ascend Flight Global for ‘in service aircraft’ only as of March 30, 2018.2 Computed as of each respective year end; Age of aircraft calculated as difference between 2018 and build year. Percentages are based on number of aircraft

13

Liquidity of TBOLT Portfolio Assets is Consistent with ALC Aircraft Strategy

The broad installed operator base of ALC / TBOLT’s aircraft assets is the basis of its liquidity

TBOLT’s aircraft asset concentrations are consistent with ALC’s overall strategy and capitalize on the large operator bases

Operators1 351 488 129

# Total In Service1 7,277 7,396 1,263

ALC Owned and on Order2

236(3) 276 49

6 12TBOLT I 1

11(4) 6TBOLT II 1

TBOLT I and II feature liquid aircraft types, consistent with ALC’s fleet management strategy

TBOLT II continues ALC’s aircraft strategy of only investing in liquid aircraft types1 Source: Obtained from Ascend Flight Global for ‘in service’ aircraft only as of February 20182 As of June 30, 2018; 276 figures for Boeing 737 aircraft includes firm commitments to purchase 30 737-8 MAX aircraft from Boeing pursuant to an Agreement entered into in August 2018.3 Includes all variants of Airbus A319, A320 and A3214 Includes all variants of Airbus A320 and A321

14

Asset Consideration: Young vs. Mid-Life Portfolios

BBIRD I1 TBOLT I2 TBOLT II3

Aircraft TypeIn Demand

Narrowbody & Widebody4In Demand Narrowbody / Some Widebody

AirlineCustomer

Same ALC customers

W.A. Aircraft Age

3.3 Years 12.5 Years 8.0 Years

W.A. Remaining Lease Term

7.3 Years 3.4 Years 4.7 Years

Lease Yield5 ~11% - 12% ~12% - 15%

Cash SecurityDeposits

Uniform Underwriting Standards

Maintenance Reserve Payers

Uniform Underwriting Standards

Mid-life aircraft assets are characterized by shorter lease terms, as well as higher yields and substantially greater maintenance reserves provided by airline customers

1 As of September 30, 20162 As of February 28, 20173 As of April 30, 20184 BBIRD I portfolio included one regional aircraft5 Age-adjusted yield based on ALC’s average portfolio lease yield and 3.4% annual depreciation. Through June 30, 2018, ALC’s core rental revenues have averaged 11.5% since 2011, calculated as rental of flight equipment, excluding overhaul revenue and amortization of initial direct costs, divided by average net book value. ALC’s portfolio age has had a weighted average age below 3.9 years since 2011.

15

Historical Aircraft ABS Transaction Volume

Aircraft & Engine Asset Backed Issuances

Source: Bank of America

~$20 bn ~$14 bn ~$25 bn

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

YTD

New

Issu

ance

($ b

n)

Improving, but Challenging Structure and Collateral

• Low incentives to refinance at expected final payment date, with step-ups of only 50 bps• Senior debt rating reliant on monoline guarantees• Structures with 1-4 tranches, with shorter WALS (~5 yrs)• Collateral still >20% outdated aircraft• Single-A LTV still ~75%, but lower all-in LTVs (~80%)• Variable amortization schedule remains

16

Evolution of Aviation ABS

1.0Pre 9/11 Deals

2.0Post 9/11 to Financial Crisis

Post 2008Financial Crisis v1.0

3.0Post Financial Crisis (2012 to Present)

Complicated Structures, Weak Collateral

• Out-of-favor aircraft models comprised the majority of these pools• Complicated transaction structures composed of up to 9 different

fixed and floating rates• All-in LTVs up to 95.5%, with single-A LTVs up to ~75%• Variable amortization rates based on aggressive depreciation

assumptions• WALs >10 yrs for some tranches• Imperfect hedges between fixed assets and floating rate debt further

hampered performance

Aircraft ABS is shifting from an esoteric asset class to a “flow” product

Streamlined Structures with Top-tier Collateral

• Substantially all highly liquid aircraft for collateral• Simple 2-3 tranche structures, fixed rate issuance• Predictable straight-line principal amortization, with step-ups of 200 bps

incentivizing refinancing• Look-forward maintenance and security deposit reserves• Single-A LTVs at ~65%, with all-in LTVs ~76% for TBOLT II

Simplifying the Debt Structure

First post-crisis AA note featured in aviation ABS

Straight-line principal amortization for the debt notes

Fully pledged security deposits

Maintenance look forward

200bps step-up at expected final payment date

DSCR and utilization triggers

105% repayment of debt upon dispositions, subject to certain conditions

Early prepayment penalties

ALC-Serviced ABS Issuances

BBIRD TBOLT I TBOLT II

Alignment of Interest with 3rd Party Equity

To achieve economic alignment with investors, ALC receives an incentive fee after clearing certain performance hurdles

A substantial portion of ALC’s economics in the transaction is based on successful re-leasing and sales

Standard senior servicing fees

Equity Structure Evolution

Introduction of Aircraft Portfolio Shares to allow wider equity participation

Equal and enhanced disclosure to debt and equity participants

Robust upfront and ongoing investor reporting

Flexible tax structure

17

18

Thunderbolt II Overview

Investor-Friendly Format for Equity

Participation

1

Enhanced Information

Disclosure and Model Access

2Liquidity and Flexible

Tax Structure

5

Low Leverage and Portfolio

Characteristics Provide Strong On-Going Cash Flow

4

Debt Structure Promotes Alignment

and Provides Flexibility to Manage

Portfolio

3Investor Friendly

Governance Structure

6

144A/ Reg S cleared through DTC and freely tradable to facilitate greater liquidity

Ability to participate in smaller minimum denominations, leading to more diversified investor participation

Improved disclosure, taking lessons from public company governance, access to portfolio information, and functional cash flow model to create greater transparency and facilitate increased secondary trading

Global Aircraft Portfolio Shares (GAPS) investors expected to benefit from enhanced liquidity

ALC has a history of developing capital markets programs and growing liquidity

PFIC tax structure facilitates off-shore ownership

Expected high recurring cash yield to equity while actively de-levering the structure

Ability to invest in equity with strong alignment to manager due to incentive fee structure and ALC’s 5.0% ownership of APS

Ability to opportunistically sell certain percentage of aircraft in first 4 years without a make-whole, no make-whole after year 4

Certificated Aircraft Portfolio Shares (CAPS) holder, ITE Management L.P., holds a board seat, working closely with the portfolio manager ALC

Other 2 of 3 total TBOLT II board seats are independent

The governance structure, together with the incentive fee, align the interests of all parties

We believe that transaction structuring is key to a successful, replicable platform

19

Global Aircraft Portfolio Shares OverviewInvestor-Friendly Format for Equity Participation

The structure includes an equity class guided by the same principals of liquidity, alignment, simplicity, and transparency asthe TBOLT II debt

Thunderbolt II APS Limited (“the Company”) issued 490 APS

available for purchase by investors (the Company holds leasing

residuals via e-note)

CAPS: 10% of equity shares offered in the Company

GAPS: 90% of equity shares offered in the Company

5.0% of APS will be purchased by ALC

Issuance was less than 500 shares to facilitate a Private

Company Offering

CAPS investor performs legal diligence on lease agreements

CAPS investor performs technical diligence on each aircraft

CAPS investor reviews credit profile of initial lessees

Equity: 490 Total APS (Aircraft Portfolio Shares)

441 Global Aircraft Portfolio Shares (GAPS)

49 Certificated Aircraft Portfolio Shares (CAPS)

GAPS CAPS

Share Form DTC registered Physical Delivery

Offering Format 144A/ Reg S Section 4(a)(2)

Ability to Exit Investment

No restrictionsShares can only be transferred with the

consent of ALC

Governance No board selection rights 1 board director

Voting Rights No Yes

Exchange Listing Cayman N/A

Investor Base Expected to be diverse ITE Management L.P.

Diligence

Upfront information set and ongoing reporting with aligned equity holders and transaction

agents

Conducts initial legal and technical due diligence

GAPS offered through DTC in 144A and Reg S form to facilitate liquidity of shares

A smaller GAPS minimum denomination allows for investors to customize equity participation

20

TBOLT II Investor ModelModel Functionality – Inputs Screen

The model incorporates the capability to flexibly analyze cash flows, sensitivities, and returns generated by the investment

Users can toggle any of the following starred assumptions (*), as well as debt pricing, to evaluate returns

Investors can also view the economics of the incentive fee to ALC to demonstrate alignment

Allows user to toggle between lease rates and sales proceeds based on Ascend or the average of 3 appraisers

Threshold over benchmark whereby ALC would begin to earn-out (Incentive Case)

Servicing fees paid in the debt / equity waterfall

Incentive Fee: % of proceeds above benchmark that is shared

CAPS Equity Economics

Allows user to select a maintenance forecast prepared by ICF (“Issuer” toggle) or input their own

Allows user to tailor inflation rate in model to own assumptions

Allows user to apply discounts and premiums to lease rates, both current and upon re-lease, as well as adjust AOG (aircraft on ground)

Allows user to apply discounts and premiums to disposition proceeds from the Appraisal Case

Allows user to adjust portfolio disposition timing, either at the portfolio or aircraft by aircraft level

*

*

*

**

***

AssumptionsSelect Appraisal Case Avg of 3 Appraisals

Benchmark Definition (ASCEND + Additional X%) X% of Ascend Renewal Lease 6% X% of Ascend Residuals 6%

ALC Servicing Fee % of Rents (top of waterfall) 3.00% % of Rents (Incentive - Equity Waterfall) 1.00%

ALC Economics Lease Upside 50% Disposition Upside 50%

Board Equity Board Equity Contribution (% of E-Note) 10.0% Board Equity Fee ($MM) per Annum 0.20 Board Equity Purchase Price (%) 98.5%

Maintenance Forecast ICF_Mgmt

Collateral Value SensitivityForecast Inflation (Renewal Lease Rates + Residual Values) 2.00%

Lease Rate Sensitivity (All Aircraft)Lease Revenue Premium / (Discount) 0.0% -Apply Lease Rate Premium/(Discount) to Renewal Only

Residual Value Sensitivity (Entire Portfolio)Residual Value Premium / (Discount) 6.50%

.Aircraft Disposition Strategy (entire portfolio sale single date, ARD or later) Sell/Refi at ARD+Portfolio Sale/Refi Date Sep-25

Transaction Enhancements Cash Flow Summary ($MM) ($MM) %

Maintenance Support Account 5.0 Current Lease 303.5 35.2%Security Deposit Reserve Account 13.8 Renewal Lease 147.8 17.2%Expense Reserve Account 0.5 Dispositions 410.1 47.6%Mezz Note Reserve Account 0.0 Total 861.5 100.0%Liquidity Facility 14.5Total Transaction Enhancements 33.8 ALC Value Disc Rate ($MM)

Servicing Fee 17.0% 13.1Upside (Lease and Disp) 17.0% 28.9

Purchase Price IRR SensitivityPurchase Price/IRR Board Equity (CAPS) Liquid Equity (GAPS) ALC Economics $MM

Senior Note Proceeds 450.010.4 94.9 Sub Notes 0.0

IRR 19.48% 17.00% Board Equity (CAPS) 10.4Liquid Equity (GAPS) 94.9Total Debt + E-Note Proceeds 555.2

Cash on Cash Board Equity (CAPS) Non Board Equity (GAPS)Transaction Year ($MM) Annual Cumul / Avg ($MM) Annual Cumul / Avg

1 2.5 23.8% 23.8% 20.2 21.3% 21.3%2 1.0 9.3% 16.5% 6.9 7.2% 14.3%3 1.0 9.2% 14.1% 6.8 7.2% 11.9%4 2.6 24.7% 16.7% 21.3 22.4% 14.5%5 1.7 16.7% 16.7% 13.8 14.6% 14.5%6 0.9 8.2% 15.3% 5.9 6.2% 13.1%7 15.2 146.3% 34.0% 134.9 142.2% 31.6%8 0.3 3.3% 30.2% 2.9 3.1% 28.0%

105.4Purchase Price ($MM)(sum of T4 + U4)

21

TBOLT II Investor ModelOutputs – Model Results (Pricing Case)

The model provided allows for investors to see key investment metrics for different assumptions

Model is expected to produce robust descriptive outputs such as sources of cash flow, IRRs, cash on cash returns, and granular monthly cash flows

Model outputs are fully transparent and disclose the economic impact to the holders of debt, CAPS, GAPS, and ALC as Servicer

Robust annual cash on cash returns in the Pricing Case

Thunderbolt II valuation was driven by cash-flow analysis

A320-200, 43%

B737-800, 27%

A321-200, 15%

A330-200, 12%

B737-700, 3%

Overview of Thunderbolt II

22

Class Size ($mm) Rating (F/K) LTV WAL3 Maturity3 Spread Yield CouponClass A 375.0 A / A 65.1% 5.3 yrs 7.1 yrs 1.30% 4.183% 4.147%Class B 75.0 BBB / BBB 78.2% 5.3 yrs 7.1 yrs 2.24% 5.125% 5.071%Total Debt 450.0 1.46% 4.340% 4.301%

Total Equity 105.2 17.0% IRR4

Proceeds from Deal 555.2

Total Consideration 594.7

Fleet size 18 aircraftWtd. avg fleet age 8.0 yearsWtd. avg remaining lease term 4.7 yearsDiversification 16 lessees / 15 countriesInitial appraised value $575.7 million2

Lease rate factor 1.01%

Portfolio Summary1

Class A Debt Class B Debt Equity (GAPS)Subscription Level 2.7x oversubscribed 4.1x oversubscribed 6.7x oversubscribedTotal # of Investors (Orders) 22 investors 11 investors 23 investorsFinal # of Investors (Allocations) 21 investors 6 investors 20 investors

Final Capital Structure

Investor Analysis

(1) Data as of April 30, 2018, unless otherwise noted.(2) As of March 31, 2018, including maintenance adjustment by IBA, Collateral Verifications and Acumen(3) Based on the Pricing Case (4) For GAPS only

Key Improvements and Differentiators in TBOLT II

Equity Structure Liquidity

Equity investment structured as a tradeable security

Disclosure Enhanced transparency and disclosure in the form of a user-friendly investor model detailing out portfolio information, cash flows, maintenance, appraisals

Reporting Robust upfront and ongoing investor reporting: 1) monthly reports 2) Bloomberg, 3) Intex, 4) DealVector (cash flow model)

Governance Board comprised of one equity director, and two independent directors. All decisions require unanimous board consent

Alignment of Interest Earn-out structure that incentivizes ALC to outperform on re-leasing and aircraft sales. ALC will earn 50% over 106% of the Ascend benchmark for both leases and aircraft sales

ALC 5% ownership of the equity

Flexible Tax Structure Structure set up as a PFIC, which does not require tracking of onshore and offshore ownership. No tax related restrictions on equity ownership

1

2

3

4

5

6

23

Transaction structuring was important factor in successful, replicable platform

TBOLT 2018-A Series A secondary trading spreads tightened by 21 bps from pricing in 5 days

The BBIRD and TBOLT Class A yields have tightened significantly on the secondary trading markets between (~100 and ~140 basis points respectively)

Since their respective closings, ALC’s TBOLT and BBIRD offerings have been highly liquid names in aircraft financing thanks to strong investor participation and strong support from ALC’s core bank group

TBOLT 2018’s new tradable equity product, GAPS, has traded 12 shares in the past month

Out of 30 aircraft financing transactions surveyed, ALC’s TBOLT and BBIRD platforms had the highest investor bases, with 40, 43, and 41 initial purchasers for BBIRD I, TBOLT I, and TBOLT II, respectively

Secondary Trading Since Pricing1, 2 Secondary Trading Volumes1, 2

Aircraft ABS 3.0 Trading Summary (# of Trades)1, 2 Investor Participation3

0

50

100

150

200

250

O-16 D-16 F-17 M-17 M-17 J-17 A-17 O-17 D-17 J-18 M-18 M-18 J-18 A-18

Spread (bps)

TBOLT 2017 BBIRD 2016 TBOLT 2018

$99, 53%$7, 43%

$7, 4%

TBOLT 2017 (Total: $185mm)

Series A Series B Series C

$35, 18%

$104, 54%

$54, 28%

BBIRD 2016 (Total: $192 mm)

Series AA Series A Series B

0123456789

1-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44

Num

ber o

f Dea

ls

Number of Unique Investors

Investor Participation in Aircraft ABS Debt Transactions3

0

10

20

30

40

50

60

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

2017 2018

AASET BBAIR BBIRD BBIRD CLAST DCAL DHAL EAFL ECAF EGLE KDAC LAFL

LIFT MAPSL METAL MRLN RPRO SAPA SHNTN SJETS SPRTE TBOLT WAAV WESTF

After pricing on July 19, 2018 TBOLT 2018-A trading was 12% of the month’s trading by volume

ALC’s 3 aircraft financings comprise >15% of trades by deal count since June 2015

$2, 18%

$4, 49%

$3, 33%

TBOLT 2018 (Total: $8mm)

Series A Series B Series G

Liquidity and Secondary Market ActivityALC Spreads have Tightened with Trading

1 Trades gathered from FINRA ABS TRACE platform and Bloomberg as of August 31, 2018; yields and spreads are estimated2 Nothing contained herein shall be relied upon as a promise or representation as to the future performance of TBOLT 2018-1, TBOLT 2017-1, BBIRD 2016-1, or any current or future aircraft finance transactions involving ALC3 Chart includes: WEST 2018-A, TBOLT 2018-A, CLAS 2018-1, MAPS 2018-1, AASET 2018-1, WAVE 2017-1, METAL 2017-1, TBOLT 2017-1, WEST 2017-A, SJETS 2017-1, AASET 2017-1, CLAS 2017-1, FALCON 2017-1, LAFL 2016-1, AASET 2016-2, BBIRD 2016-1, CLAS 2016-1, HAIL 2016-1, AASET 2016-1, CLAS 2015-1, SHNTN 2015-1, ECAF 2015-1, DCAL 2015-1, ATLAS 2014-1, EGLE 2014-1, AASET 2014-1, CLAS 2014-1, RISE 2014-1, EAFL 2013-1, AABS 2013-1

24

The 18-aircraft Thunderbolt II transaction generated an implied pre-tax IRR of 16.6% over an average holding period of 5.9 years through the transaction’s closing date of August 1, 2018

Thunderbolt II Illustrative Economics

Year

AircraftAcquisition

(equitycontribution)

Rental Revenue

Interest Expense

Debt Repayment

SG&A Expense

Gross Sales Proceeds

Net Cash

2010 (50.8) 6.6 (1.4) (1.8) (0.4) (47.8)

2011 (35.7) 25.1 (4.8) (7.0) (1.5) (23.8)

2012 (48.1) 48.4 (11.8) (13.0) (2.9) (27.5)

2013 (40.3) 54.8 (12.1) (14.7) (3.3) (15.6)

2014 (13.9) 67.0 (14.9) (17.8) (4.0) 16.4

2015 0.0 67.3 (14.7) (18.4) (4.0) 30.2

2016 (8.2) 67.5 (13.8) (18.9) (4.1) 22.4

2017 (7.8) 68.5 (12.9) (19.7) (4.1) 24.0

2018 0.0 40.6 (7.6) (401.0) (2.4) 594.7 224.2

IRR: 16.6%(in $ millions)

Note: Interest expense based on composite interest rate for the relevant year. Debt repayment calculated to maintain ALC’s target 2.5x debt to equity ratio. SG&A expense equal to 6% of rental revenues.

25

ALC generated an implied pre-tax IRR of 16.6% on the Thunderbolt II fleet

$594.7

$512.4 $569.2 $580.7

$417.3

Total TBOLT IISales Proceeds

IBA CollateralVerifcations

Acumen Ascend(at closing)

TBOLT II sales proceeds represent a 2 - 16% premium over appraised value and a 42% premium over Ascend’s value

Appraised Market Values1 ($ mm)

+2%Consideration

over Appraised: +42%+4%+16%

1Half life current market values as of March 31, 2018 for IBA, Collateral Verifications, and AcumenHalf life current market values as of July 20, 2018 for Ascend

TBOLT II Sales Proceeds vs. Appraised Values

26

Thunderbolt II highlights the significant imbedded value of ALC’s fleet vs. appraiser valuations

Total TBOLT II Consideration

Thunderbolt II Fee Economics to ALC

$52.3mm

$24.5mm

$83.2mm

$160.0mm

Value of Aircraft & Cash-Flows

Servicing Fees

Maximum Earnout

Total

0 – 3 Months Post Close

Monthly Over Life of Transaction

At Sale of AssetTotal Expected Value to ALC Shareholders

27

Thunderbolt II expected to result in $160 million in revenues and gains for ALC shareholders

1

2

1 Expected gains on sale of aircraft are spread between gain on sale and aircraft rental revenue. See slide 28.2 Earn-out will be based on re-leasing and sales of aircraft.

Gain on Sale Accounting for ALC

28

~20.9mm

~31.4mm

Total Expected Gain: $52.3mm1 Thunderbolt II Sale Process:

Transaction settled on August 1, 2018Upon settlement, ALC placed the aircraft in the TBOLT II portfolio into a held-for-sale account at which point depreciation stops accumulating (in-line with accounting rules)During the transfer process, ALC continues to collect rent from the airlines which is recorded as rental revenueThis rental revenue offsets the economic gain until the point at which the aircraft is actually soldAt final sale, ALC records the remaining economic gain through the aircraft sales and trading line-item on the income statement

Under current accounting guidelines, ALC’s gain on TBOLT II is spread across both rental revenue and gain on sale

~60% Gain on Sale

~40% Rental Revenue

1 Expected gains on sale of aircraft are spread between gain on sale and aircraft rental revenue.

TBOLT II Takeaways

The TBOLT II transaction demonstrates the embedded value of ALC’s mid-life aircraft assets

The TBOLT II transaction was valued on the lease and sale cash flow generation of the portfolio

ALC Valuation Methodology

Not only does ALC buy assets well, we generate meaningful value by putting in place long-dated lease contracts

The TBOLT II transaction valued mid-life aircraft assets on the NPV of cash flows

A similar methodology can be applied to the contracted cash flows of ALC’s on balance sheet fleet

Moreover, ALC’s orderbook assets subject to committed future leases also have a contracted cash flow stream tied to them, whereby value can be determined with a similar NPV approach

ALC Valuation Methodology: Lessons Learned from TBOLT II

29

ALC Valuation Implications

ALC Continues to Unlock Value for ALC Shareholders

Aircraft Value GrowthLease

Cash-Flow Streams

Management Business

Thunderbolt II economics continue to highlight the value of lease rental cash-flow streams, supporting our belief in the tremendous amount of value already on ALC’s balance sheet not

incorporated in ALC’s public equity valuation

Management Team

Strong Returns and Profitability

31

Compelling Opportunity to Realize Value through Growth of Highly Visible Cash Flow Streams

Existing Fleet Orderbook

$11.3bnContracted

Rentals

$13.7bnCommitted

Rentals

271 Aircraft

391 Aircraft$25bn of

Cash Flow

The success of the TBOLT platform further substantiates the value of ALC’s future cash flows

Data as of June 30, 2018, unless otherwise noted; 391 aircraft in orderbook includes 33 Boeing aircraft purchased on firm commitment pursuant to an Agreement entered into in August 2018. 32

Expansion of TBOLT Platform Provides for a Differentiated Valuation Profile

Asset based valuations have been widely used to value aircraft lessors. There is substantial value in ALC’s current / future earnings which, we believe, is not captured in these metrics

Thunderbolt Platform highlighted the value of these cash-flows and created a replicable avenue to mitigateasset risk for our mid-life aircraft

We believe the expansion of the TBOLT platform will result in a differentiated valuation profile relative to ALC’s peers, with increased shareholder value created by:

Reducing residual value risk Increasing liquidity in the secondary market for mid-life aircraft Growing our fee based income stream

Asset Based Valuation

Earnings Valuation

Thunderbolt II Helps to Realize Value of Lease Cash-Flows

33

Conclusion

34

Increased Shareholder

Value

Risk Reduction in Mid-Life

Space

Larger Investable Universe

Strong Returns & Growth Profile

We believe this expansion further differentiates us from peers and unlocks long-term value for our shareholders

ALC’s Expanded Management PlatformALC Today +

Appendix

Appendix Non-GAAP reconciliations

1Adjusted margin before income taxes is adjusted net income before income taxes divided by total revenues, excluding insurance recoveries2 Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes plus assumed conversions divided by weighted average diluted shares outstanding.

(in thousands, except share and per share data) 2018 2017 2017 2016 2015 2014 2013

Reconciliation of net income to adjusted net incomebefore income taxes:

Net income 115,211$ 100,925$ 756,152$ 374,925$ 253,391$ 255,998$ 190,411$

Amortization of debt discounts and issuance costs 8,010 6,437 29,454 30,942 30,507 27,772 23,627

Stock-based compensation 4,885 5,304 19,804 16,941 17,022 16,048 21,614

Settlement - - - - 72,000 - -

Insurance recovery on settlement - (950) (950) (5,250) (4,500) - -

Provision for income taxes 32,198 54,944 (146,622) 205,313 139,562 138,778 103,031

Adjusted net income before income taxes 160,304$ 166,660$ 657,838$ 622,871$ 507,982$ 438,596$ 338,683$

Assumed conversion of convertible senior notes 1,735 1,431 5,842 5,780 5,806 5,811 5,783

Adjusted net income before income taxes plus assumed conversions 162,039$ 168,091$ 663,680$ 628,651$ 513,788$ 444,407$ 344,466$

Reconciliation of denominator of adjusted margin before income taxes:

Total revenues 397,814$ 380,957$ 1,516,380$ 1,419,055$ 1,222,840$ 1,050,493$ 858,675$

Insurance recovery on settlement -$ (950)$ (950)$ (5,250)$ (4,500)$ -$ -$

Total revenues, excluding insurance recovery on settlement 397,814$ 380,007$ 1,515,430$ 1,413,805$ 1,218,340$ 1,050,493$ 858,675$

Adjusted margin before income taxes1 40.3% 43.9% 43.4% 44.1% 41.7% 41.8% 39.4%

Weighted-average diluted shares outstanding 112,424,582 111,564,483 111,657,564 110,798,727 110,628,865 110,192,771 108,963,550

Adjusted diluted earnings per share before income taxes2 1.44$ 1.51$ 5.94$ 5.67$ 4.64$ 4.03$ 3.16$

Year Ended December 31,Three Months Ended June 30,

36

Sheet1

Air Lease Corporation and Subsidiaries

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share amounts)

Three Months Ended June 30,Year Ended December 31,

(in thousands, except share and per share data)2018201720172016201520142013


Net income$ 115,211$ 100,925$ 756,152$ 374,925$ 253,391$ 255,998$ 190,411

Amortization of debt discounts and issuance costs8,0106,43729,45430,94230,50727,77223,627

Stock-based compensation4,8855,30419,80416,94117,02216,04821,614

Settlement----72,000--

Insurance recovery on settlement-(950)(950)(5,250)(4,500)--

Provision for income taxes32,19854,944(146,622)205,313139,562138,778103,031

Adjusted net income before income taxes$ 160,304$ 166,660$ 657,838$ 622,871$ 507,982$ 438,596$ 338,683

Adjusted net income (LTM)$ 160,304$ 166,660$ 657,838$ 622,871$ 507,982$ 438,596$ 338,683

Assumed conversion of convertible senior notes1,7351,4315,8425,7805,8065,8115,783

Adjusted net income before income taxes plus assumed conversions$ 162,039$ 168,091$ 663,680$ 628,651$ 513,788$ 444,407$ 344,466

Reconciliation of denominator of adjusted margin before income taxes:

Total revenues$ 397,814$ 380,957$ 1,516,380$ 1,419,055$ 1,222,840$ 1,050,493$ 858,675

Insurance recovery on settlement$ - 0$ (950)$ (950)$ (5,250)$ (4,500)$ - 0$ - 0

Total revenues, excluding insurance recovery on settlement$ 397,814$ 380,007$ 1,515,430$ 1,413,805$ 1,218,340$ 1,050,493$ 858,675

Adjusted margin before income taxes140.3%43.9%43.4%44.1%41.7%41.8%39.4%

Weighted-average diluted shares outstanding112,424,582111,564,483111,657,564110,798,727110,628,865110,192,771108,963,550

Adjusted diluted earnings per share before income taxes2$ 1.44$ 1.51$ 5.94$ 5.67$ 4.64$ 4.03$ 3.16

Beginning shareholders' equity$ 2,785,184$ 2,772,062$ 2,523,434$ 2,332,621ERROR:#REF!

Ending shareholders' equity$ 3,104,403$ 3,019,912$ 2,772,062$ 2,523,434$ 2,332,621

Average shareholders' equity$ 2,944,794$ 2,895,987$ 2,647,748$ 2,428,028ERROR:#REF!

Adjusted net income return on average equity (LTM)22.3%21.5%19.2%18.1%ERROR:#REF!

40%44%43%44%42%42%39%

Sheet2

Sheet3

Appendix Non-GAAP reconciliations

1Adjusted return on equity before income taxes is adjusted net income before income taxes divided by average shareholders’ equity.

(in thousands, except percentage data) June 30, 2018 June 30, 2017 2017 2016 2015 2014 2013


Net income 796,152$ 376,126$ 756,152$ 374,925$ 253,391$ 255,998$ 190,411$

Amortization of debt discounts and issuance costs 30,057 31,822 29,454 30,942 30,507 27,772 23,627

Stock-based compensation 19,044 18,278 19,804 16,941 17,022 16,048 21,614

Settlement - - - - 72,000 - -

Insurance recovery on settlement - (950) (950) (5,250) (4,500) - -

Provision for income taxes (187,641) 207,597 (146,622) 205,313 139,562 138,778 103,031

Adjusted net income before income taxes 657,612$ 632,873$ 657,838$ 622,871$ 507,982$ 438,596$ 338,683$

Reconciliation of denominator of adjusted return on equity before income taxes:

Beginning shareholders' equity 3,558,204$ 3,195,529$ 3,382,187$ 3,019,912$ 2,772,062$ 2,523,434$ 2,332,621$

Ending shareholders' equity 4,337,842$ 3,558,204$ 4,127,442$ 3,382,187$ 3,019,912$ 2,772,062$ 2,523,434$

Average shareholders' equity 3,948,023$ 3,376,867$ 3,754,815$ 3,201,050$ 2,895,987$ 2,647,748$ 2,428,028$

Adjusted return on equity before income taxes1 16.7% 18.7% 17.5% 19.5% 17.5% 16.6% 13.9%

Year Ended December 31,LTM

37

Sheet1

Air Lease Corporation and Subsidiaries

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share amounts)

LTMYear Ended December 31,

(in thousands, except percentage data)June 30, 2018June 30, 2017201720162015201420132012


Net income$ 796,152$ 376,126$ 756,152$ 374,925$ 253,391$ 255,998$ 190,411$ 131,919

Amortization of debt discounts and issuance costs30,05731,82229,45430,94230,50727,77223,62716,994

Stock-based compensation19,04418,27819,80416,94117,02216,04821,61431,688

Settlement----72,000---

Insurance recovery on settlement-(950)(950)(5,250)(4,500)---

Provision for income taxes(187,641)207,597(146,622)205,313139,562138,778103,03172,054

Adjusted net income before income taxes$ 657,612$ 632,873$ 657,838$ 622,871$ 507,982$ 438,596$ 338,683$ 252,655

Reconciliation of denominator of adjusted return on equity before income taxes:

Beginning shareholders' equity$ 3,558,204$ 3,195,529$ 3,382,187$ 3,019,912$ 2,772,062$ 2,523,434$ 2,332,621$ 2,176,283

Ending shareholders' equity$ 4,337,842$ 3,558,204$ 4,127,442$ 3,382,187$ 3,019,912$ 2,772,062$ 2,523,434$ 2,332,621

Average shareholders' equity$ 3,948,023$ 3,376,867$ 3,754,815$ 3,201,050$ 2,895,987$ 2,647,748$ 2,428,028$ 2,254,452

Adjusted return on equity before income taxes116.7%18.7%17.5%19.5%17.5%16.6%13.9%11.2%

Sheet2

Sheet3

AppendixCash Flow Coverage Calculations

($ in billions) June 30, 2018

Net Book Value of Aircraft A 14,864$

Minimum Future Lease Rentals from Operating Leases B 11,261$

Residual Exposure A - B 3,603$

Shareholders Equity C 4,338$

Residual Value Risk (A-B) / C 0.83x

Total Debt D 10,962$

Contracted Cash Flows / Debt B / D 103%

38

Sheet1

($ in billions)June 30, 2018

Net Book Value of AircraftA$ 14,864

Minimum Future Lease Rentals from Operating LeasesB$ 11,261

Residual ExposureA - B$ 3,603

Shareholders EquityC$ 4,338

Residual Value Risk(A-B) / C0.83x

Total DebtD$ 10,962

Contracted Cash Flows / DebtB / D103%

Sheet2

Sheet3

Appendix

Calculation of Pre-tax ROE

39

(in thousands, except share and per share data) June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017

Net Income $115,211 $110,651 $471,102 $99,188Income tax expense (benefit) $32,198 $30,668 ($305,438) $54,931Income before taxes $147,409 $141,319 $165,664 $154,119Pre-tax income (TTM ended June 30, 2018) $608,511

Beginning shareholders' equity (June 30, 2017) 3,558,204Ending shareholders' equity (June 30, 2018) 4,337,842Average shareholders' equity 3,948,023

Pre-tax income return on average equity (TTM ended June 30, 2018) 15.4%

Three months ended

Sheet1

Jun-18Mar-18Dec-17Sep-17

Revenues

Rental of flight equipment…………………………………………………………….$ 393,479$ 377,862$ 378,481$ 359,487

Aircraft sales, trading and other……………………………………………………………….4,3353,34719,99017,278

Total revenues………………………………………………………………………..397,814381,209398,471376,765

Expenses

Interest……………………………………………………………………………………………………………..73,45268,94364,32663,514

Amortization of discounts and deferred debt issue costs……………………………………………………………………………………………………………..8,0108,0227,0666,959

Extinguishment of debt……………………………………………………………………………………………………………..----

Amortization of convertible debt discounts----

Interest expense……………………………………………………………………………………………………………..81,46276,96571,39270,473

Depreciation of flight equipment……………………………………………………………………………………………………………..142,600136,134130,400127,553

Selling, general and administrative……………………………………………………………………………………………………………..21,45823,35925,64619,262

Stock-based compensation……………………………………………………………………………………………………………..4,8853,4325,3695,358

Total expenses……………………………………………………………………………………………………………..250,405239,890232,807222,646

Net Income$ 115,211$ 110,651$ 471,102$ 99,188

Income tax expense (32,198)(30,668)305,438(54,931)

Income before taxes147,409141,319165,664154,119

Beginning shareholders' equity (TTM)3,558,2043,459,2323,382,1873,288,289

Ending shareholders' equity (TTM)4,337,8424,226,6234,127,4423,655,583

Average shareholders' equity (TTM)3,948,0233,842,9283,754,8153,471,936

Net income (TTM)$ 796,152$ 781,866$ 756,152$ 382,038

Pre-tax income (TTM)$ 608,511$ 616,971$ 609,530$ 593,269

Pre-tax income return on average equity (TTM)15.4%16.1%16.2%17.1%

Sheet2

Three months ended

(in thousands, except share and per share data)June 30, 2018March 31, 2018December 31, 2017September 30, 2017

Net Income$115,211$110,651$471,102$99,188

Income tax expense (benefit)$32,198$30,668($305,438)$54,931

Income before taxes$147,409$141,319$165,664$154,119

Pre-tax income (TTM ended June 30, 2018)$608,511

Beginning shareholders' equity (June 30, 2017)3,558,204

Ending shareholders' equity (June 30, 2018)4,337,842

Average shareholders' equity 3,948,023

Pre-tax income return on average equity (TTM ended June 30, 2018)15.4%

Investor Update �Thunderbolt II and BeyondForward Looking Statements & Non-GAAP MeasuresAgendaALC OverviewAir Lease SnapshotTrack Record of Strong Growth & ProfitabilitySuperior Performance to Peers and the S&P 500Management Business Expands Investable UniverseWhat Does TBOLT II Mean for ALC?Thunderbolt II StrategyOverview of ALC’s Management PlatformStrategic Fit of the Thunderbolt Program �Liquidity of TBOLT Portfolio Assets is Consistent with ALC Aircraft Strategy�Asset Consideration: Young vs. Mid-Life PortfoliosHistorical Aircraft ABS Transaction VolumeEvolution of Aviation ABSALC-Serviced ABS IssuancesThunderbolt II OverviewGlobal Aircraft Portfolio Shares Overview�Investor-Friendly Format for Equity ParticipationTBOLT II Investor Model�Model Functionality – Inputs ScreenTBOLT II Investor Model�Outputs – Model Results (Pricing Case)Overview of Thunderbolt IIKey Improvements and Differentiators in TBOLT IILiquidity and Secondary Market Activity�ALC Spreads have Tightened with TradingThunderbolt II Illustrative EconomicsTBOLT II Sales Proceeds vs. Appraised ValuesThunderbolt II Fee Economics to ALCGain on Sale Accounting for ALCALC Valuation Methodology: Lessons Learned from TBOLT IIALC Valuation ImplicationsALC Continues to Unlock Value for ALC ShareholdersCompelling Opportunity to Realize Value through Growth of Highly Visible Cash Flow StreamsExpansion of TBOLT Platform Provides for a Differentiated Valuation ProfileConclusionAppendixAppendix �Non-GAAP reconciliationsAppendix �Non-GAAP reconciliationsAppendix�Cash Flow Coverage CalculationsAppendix

Documents

Investor Update - d17avvkqn7yvpt.cloudfront.net · Statements in this presentation that are not historical facts are hereby identified as “forward-looking statements,” including